Deutsche Bank energy analyst Paul Sankey today raised his rating on numerous oil refining stocks, arguing that, noting that demand is improving, which is helping to reduce inventories, and that with low production investment of late, a continued rise in demand will force OPEC to boost production, which would improver refiners’ margins.
He raises Valery Energy (VLO) and Sunoco (SUN) to “Hold” from “Sell,” and raises Frontier Oil (FTO), Tesoro (TSO), CVR Energy (CVI), and Dalek (DK) from “Hold” to “Buy.”
Picking up on his thesis outlined in October, that the oil biz is entering a period of demand destruction, Sankey argues that niche refiners are the best bet, and that geography is the big factor in who wins and loses, with European names fairing worse than U.S. names.
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